Bankruptcy in Ontario

Question: Obviously I’ve run into some financial difficulty… and I’m wondering if I should look at bankruptcy.

After my necessities are taken car of (rent, car payment, car insurance), I have about $100 left over to pay my credit card. This didn’t cover the minimum payment by a long shot, so the credit card was turned over to a collection agency. I explained that I was paying all that I could, but the collection agency said it wasn’t enough and they would have to seek legal action. I can’t afford a lawyer, and I can’t make my necessities any less (I’ve gotten rid of cable, my cell phone, and my car is worth less than what I own on it so I can’t sell it… also, I wouldn’t have my job if I didn’t have a car).

Can a collection agency do this? Do I have to contact a lawyer or can I represent myself? Is bankruptcy the only way to get the collection agency to understand that I’m doing all I can?

Thanks for your help!

Answer: You have a few options. First, you can continue to pay what you can afford. In most cases the credit card company won’t refuse a payment. If you are paying it is less likely that they will take you to court.

Your second option is to “call their bluff” and let them take you to court. Depending on the amount you owe your case will probably be heard in small claims court, so you can represent yourself (or hire a lawyer if you wish). Since you owe the money, it is likely that the court will decide that you owe the money, and there will be a judgment against you, which may allow the creditor to garnishee your wages.

You could attempt to negotiate a settlement with them through a not for profit credit counsellor through credit counselling.

If those options don’t work, you could consider a consumer proposal or personal bankruptcy in Ontario. Whether a proposal or bankruptcy is the correct option will depend on your income, and your other debts, so we suggest you contact an Ontario bankruptcy trustee for a no charge initial consultation to determine which option is best for you.